Equity

Earnings per share

Basic earnings per share is determined by dividing net income attributable to Kellogg Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly determined, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Dilutive potential common shares consist principally of employee stock options issued by the Company, and to a lesser extent, certain contingently issuable performance shares. Basic earnings per share is reconciled to diluted earnings per share in the following table. There were 3 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended October 3, 2015, respectively. There were zero and 5 million anti-dilutive potential common shares excluded from the reconciliation for the quarter and year-to-date periods ended September 27, 2014, respectively.

Quarters ended October 3, 2015 and September 27, 2014:



(millions, except per share data)	Net income attributable to Kellogg Company		Average shares outstanding	Earnings per share
2015
Basic	$	205	354	$	0.58
Dilutive potential common shares			2	—
Diluted	$	205	356	$	0.58
2014
Basic	$	224	358	$	0.63
Dilutive potential common shares			2	(0.01		)
Diluted	$	224	360	$	0.62

Year-to-date periods ended October 3, 2015 and September 27, 2014:



(millions, except per share data)	Net income attributable to Kellogg Company		Average shares outstanding	Earnings per share
2015
Basic	$	655	354	$	1.85
Dilutive potential common shares			2	(0.01		)
Diluted	$	655	356	$	1.84
2014
Basic	$	925	359	$	2.58
Dilutive potential common shares			2	(0.02		)
Diluted	$	925	361	$	2.56

In February 2014, the Company’s board of directors approved a share repurchase program authorizing the repurchase of up to $1.5 billion of its common stock through December 2015. This authorization supersedes the April 2013 authorization and is intended to allow the Company to repurchase shares for general corporate purposes and to offset issuances for employee benefit programs.

During the year-to-date period ended October 3, 2015, the Company repurchased approximately 6 million shares of common stock for a total of $381 million. During the year-to-date period ended September 27, 2014, the Company repurchased 11 million shares of common stock for a total of $690 million.

Comprehensive income

Comprehensive income includes net income and all other changes in equity during a period except those resulting from investments by or distributions to shareholders. Other comprehensive income consists of foreign currency translation adjustments, fair value adjustments associated with cash flow hedges and adjustments for net experience losses and prior service cost related to employee benefit plans. During the quarter ended October 3, 2015, the Company amended a U.S. postretirement health plan as well as a U.S. pension plan. As a result of the U.S. postretirement health plan amendment, a prior service credit was recognized in other comprehensive income with an offsetting reduction in the accumulated postretirement benefit obligation. The U.S. pension plan amendment increased the Company's pension benefit obligation with an offsetting increase in prior service costs in other comprehensive. See Note 8 for further details.



	Quarter ended October 3, 2015									Year-to-date period ended October 3, 2015
(Results are unaudited)	Pre-tax amount			Tax (expense) benefit			After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net income							$	205								$	654
Other comprehensive income (loss):
Foreign currency translation adjustments	(88		)	5			(83		)	(142		)	(11		)	(153		)
Cash flow hedges:
Unrealized gain (loss) on cash flow hedges	7			(2		)	5			11			(3		)	8
Reclassification to net income	(7		)	1			(6		)	(14		)	1			(13		)
Postretirement and postemployment benefits:
Amount arising during the period:
Prior service credit (cost)	66			(25		)	41			66			(25		)	41
Reclassification to net income:
Net experience loss	1			—			1			3			—			3
Prior service cost	2			—			2			7			(2		)	5
Other comprehensive income (loss)	$	(19	)	$	(21	)	$	(40	)	$	(69	)	$	(40	)	$	(109	)
Comprehensive income							$	165								$	545
Net income (loss) attributable to noncontrolling interests							—									(1		)
Other comprehensive income (loss) attributable to noncontrolling interests							1									—
Comprehensive income attributable to Kellogg Company							$	164								$	546

	Quarter ended September 27, 2014									Year-to-date period ended September 27, 2014
(Results are unaudited)	Pre-tax amount			Tax (expense) benefit			After-tax amount			Pre-tax amount			Tax (expense) benefit			After-tax amount
Net income							$	225								$	926
Other comprehensive income (loss):
Foreign currency translation adjustments	(87		)	(17		)	(104		)	(54		)	(17		)	(71		)
Cash flow hedges:
Unrealized gain (loss) on cash flow hedges	(2		)	4			2			(26		)	11			(15		)
Reclassification to net income	—			—			—			(11		)	3			(8		)
Postretirement and postemployment benefits:
Amounts arising during the period:
Prior service credit (cost)	19			(7		)	12			10			(4		)	6
Reclassification to net income:
Net experience loss	1			—			1			3			—			3
Prior service cost	2			(1		)	1			8			(3		)	5
Other comprehensive income (loss)	$	(67	)	$	(21	)	$	(88	)	$	(70	)	$	(10	)	$	(80	)
Comprehensive income							$	137								$	846

Reclassifications out of Accumulated Other Comprehensive Income (AOCI) for the quarter and year-to-date periods ended October 3, 2015 consisted of the following:



(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement
	Quarter ended October 3, 2015			Year-to-date period ended October 3, 2015
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	(11	)	$	(27	)	COGS
Foreign currency exchange contracts	—			2			SGA
Interest rate contracts	1			2			Interest expense
Commodity contracts	3			9			COGS
	$	(7	)	$	(14	)	Total before tax
	1			1			Tax (expense) benefit
	$	(6	)	$	(13	)	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	1		$	3		See Note 8 for further details
Prior service cost	2			7			See Note 8 for further details
	$	3		$	10		Total before tax
	—			(2		)	Tax (expense) benefit
	$	3		$	8		Net of tax
Total reclassifications	$	(3	)	$	(5	)	Net of tax

Reclassifications out of AOCI for the quarter and year-to-date periods ended September 27, 2014 consisted of the following:



(millions)
Details about AOCI components	Amount reclassified from AOCI						Line item impacted within Income Statement
	Quarter ended September 27, 2014			Year-to-date period ended September 27, 2014
(Gains) losses on cash flow hedges:
Foreign currency exchange contracts	$	—		$	(2	)	COGS
Foreign currency exchange contracts	(2		)	(5		)	SGA
Interest rate contracts	—			(9		)	Interest expense
Commodity contracts	2			5			COGS
	$	—		$	(11	)	Total before tax
	—			3			Tax (expense) benefit
	$	—		$	(8	)	Net of tax
Amortization of postretirement and postemployment benefits:
Net experience loss	$	1		$	3		See Note 8 for further details
Prior service cost	2			8			See Note 8 for further details
	$	3		$	11		Total before tax
	(1		)	(3		)	Tax (expense) benefit
	$	2		$	8		Net of tax
Total reclassifications	$	2		$	—		Net of tax

Accumulated other comprehensive income (loss) as of October 3, 2015 and January 3, 2015 consisted of the following:



(millions)	October 3, 2015			January 3, 2015
Foreign currency translation adjustments	$	(1,272	)	$	(1,119	)
Cash flow hedges — unrealized net gain (loss)	(29		)	(24		)
Postretirement and postemployment benefits:
Net experience loss	(15		)	(18		)
Prior service cost	(6		)	(52		)
Total accumulated other comprehensive income (loss)	$	(1,322	)	$	(1,213	)

Noncontrolling interests

In December 2012, the Company entered into a series of agreements with a third party including a subordinated loan (VIE Loan) of $44 million which was convertible into approximately 85% of the equity of the entity (VIE). Due to this convertible subordinated loan and other agreements, the Company determined that the entity was a variable interest entity, the Company was the primary beneficiary and the Company consolidated the financial statements of the VIE in the U.S. Snacks operating segment. During 2015, the 2012 Agreements were terminated and the VIE Loan, including related accrued interest and other receivables, were settled, resulting in charge of $19 million which was recorded as Other income (expense) in the year-to-date period ended October 3, 2015. Upon termination of the 2012 Agreements, the Company was no longer considered the primary beneficiary of the VIE, the VIE was deconsolidated, and the Company derecognized all assets and liabilities of the VIE, including an allocation of a portion of goodwill from the U.S. Snacks operating segment, resulting in a $67 million non-cash gain, which was recorded within SGA expense for the year-to-date period ended October 3, 2015.